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Innodata (INOD)

Participants
Amy Agress SVP, General Counsel & Corporate Secretary
Jack Abuhoff Chairman, President & CEO
O'Neil Nalavadi SVP & CFO
Mark Jordan NOBLE Capital Markets
Tim Clarkson Van Clemens
Steve Kohl Mangrove
George Melas MKH Management Company
Joe Furst Furst Associates
Call transcript
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Operator

Good morning, and welcome to the Innodata Third Quarter 2017 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Amy Agress. Please go ahead, ma'am.

Amy Agress

Thank you, Alexa. everyone. morning, Good joining for Thank us you today.

of today CEO take questions. and speakers O'Neil then who detailed Jack Abuhoff, quarter with the We'll the Chairman Innodata; and first, business. review a provide perspective Jack will of will results O'Neil and your from for third Our hear are our additional Nalavadi, about follow CFO. our then We'll

carrying Data may current made providers inception for without based of our segment Intelligence Data all businesses businesses or invest these assets. and, liabilities the to or canceled investments; committed of of to fixed and external continuing Digital joint and plans, execute prospective Innodata reduced; ability the and completed integrating reduce, and IADS; that me services; ventures primarily charges let has assets qualify and companies contracts has to Securities business our willingness market clients value currently and ability First, time growing impairments is time largely on or our changes the which requirements emergence indicated limited clients and are that volumes competitive replace with materialize; clients; risks continue Media Solutions to the other difficulty our of cancel in changes of acquire; Solutions our you. These business to in contracts delay We goodwill driving acquisitions, statements call depressed of factors; intend of growth clients and its in with clients; uncertainties Data statements obligation in at-will and new to our the companies that Thank are now the not no nature Exchange in the subject to to turn or IADS, recorded call. I and projects from factors; from materially. actual during Commission. other are for that segment, and impairment uncertainties update various to conditions; information strategic segment; technological may terminated Solutions a revenue give rise competitors; potential concentration will risks could other dependency be or and results our undertake in O'Neil. we Advanced number intangible a may on projects; by a limitation, that our acquire; expectations market potential of since clients differ content of in of acquired inability Solutions Digital losses are of filings forward-looking the we number the projected synergies strategy; our that forward-looking undiscovered to and over and venture work incurred We and of including,

O'Neil Nalavadi

quarter. prior I services you, quarter adjusted $X.X review segment Good Last quarter. our revenues morning, quarters. million Digital however, sequential on financial line $XX.X everyone. for Thank million benefited key were $XXX,XXX quarter, EBITDA $XX.X collection basis. we a will we this that $XX.X the last you $XX last review to delivered compared items Amy. compared upon performance by quarter joining quarterly and to of for million last XXXX. quarter for to Data million recognizing quarter $XXX,XXX revenues cash Thank Solutions' performance Total million compared were and to us this revenues was total now today third in

this which one this $X.X revenues our basis, began $XXX,XXX $XXX,XXX then third $X.X of So, higher revenues revenues if revenues increase compared we our quarter quarter intelligence we docGenix. comparable on were million IADS to customer at was to increased consistent a quarter second of lower $X.X actually media quarter, last than revenues This were revenues work this, offset project-based of $XXX,XXX. revenues business, by by $X were million docGenix consisting and million Synodex quarter. million Synodex year. exclude In by this in for revenues our $XXX,XXX. attributable

of with down approximately quarter customer result lower the direct customers We comps. ended had of X,XXX a QX. from end As the customers, we at X,XXX

Although of from digital our or were prior $X.X XX% of At at the indirect the $X increased quarter. compared margins, consistent million excluding gross revenues margins in data in level, to our revenues both revenues business gross million customer segment or quarter the expenses, count quarters. of XXX. in XX% or amortization solutions $X.X million XXX were Consolidated acquisition-related this to XX% the

$XXX,XXX our maintenance In our to of intelligence attributable software costs $XXX,XXX this were excluding breakeven of or margins, media solutions XX% or amortization Lower gross were quarter. that quarter. of prior approximately business, at in expenses, the $XXX,XXX over revenues acquisition-related XX% in gross margins to compared prior Moving the quarter. $XXX,XXX during incurred to were certain to margins the primarily quarter compared were revenues

were I a margins of lower would lower gross now as revenues. expenses. SG&A Our bring result

recoveries payroll this last were then $X.X last due off accounts exclude comparable media these quarter IADS, to accrual quarter, expenses This primarily to and account we fees, at on by In $X.X million $XXX,XXX last $XXX,XXX higher MIS, quarter. and If expenses to receivables $XX,XXX they marketing $X.X quarter higher expenses of normal hiring benefit, million controls. in SG&A expenses, a in DDS. due this basis at expenses. for were Last compared respect due higher million intelligence million quarter of were costs than we are were also $XXX,XXX, were quarter this And business our to expenses compared expenses benefited were higher doubtful SG&A lower MIS receivables. higher lower million to $XXX,XXX. DDS compared to quarter. $X.X combination a of our by higher and cost $X by tighter million. $X.X previously-written by were in $X.X million expenses in

next to approximately down go expenses the quarter XX%. expect by We

expenses compared earnings, quarter. previous higher in the this increase of Moving of This were SG&A our $XXX,XXX in margins to to to $XXX,XXX. lower $XXX,XXX attributable losses pretax was down $XXX,XXX pretax pretax quarter $XXX,XXX losses and gross

this quarter adjusted compared losses This $X in digital EBITDA by million $XXX,XXX and offset was of earnings Our IADS. $XXX,XXX last in in $XXX,XXX comprised quarter. of Media Data to Solutions, $XXX,XXX Intelligence

quarter. and compared interests, net last profits by earnings, quarter deducting income was to tax in $X.X was $XX,XXX million net to Moving subsidiaries the After offshore tax quarter. minority loss to earned $XXX,XXX expenses this and $XXX,XXX previous compared our

Our cash and million million compared quarter $XX.X $XX.X quarter. this were to balances investment last

was lower primarily balance cash Our two for reasons.

overseas customer approximately used In part $XXX,XXX continue significant and US this quarters the to be excess quarter, of business. by prior held a so A tax for third of in balances. our in resulted purposes. we cash the $X.X overseas, our approximately significant of a million US payments dividend two, MIS needs $X part balances cash from income the First, million third refunded by quarter our cash a fund for made in we

Our capital expenditures this the $X.X quarter in quarter. were to $XXX,XXX million previous compared

Looking mark of foreign of the other in million exchange the the ahead contracts contracts exposure notional forward of currency CapEx quarter. forward to have now to to losses items. in of on quarter, quarter, to approximately third in hedging turn market, revenues. both Based end and to outstanding denominated for our our expect $XXX,XXX end $XXX,XXX expenses and $XX range At be we hedge the at had the third foreign program $XXX,XXX. fourth we the I will

Media million the to the terms $XX.X ahead revenues we Intelligence to Looking and million, over in to range between the Solutions in the With $X.X to $XX million, of of fourth be million million. range quarter of guidance, $XX.X Thank in to for million $X.X between you Jack. expect pass million to and Data call I'll million. IDAS $X.X $XX.X Digital $X.X

Jack Abuhoff

morning, on. joining I'm us you some provide context what for Thank thank we're you, and everyone today. where going for working O'Neil. and to we are additional Good

we talk what On want clearly we're be. change doing side, to the we're going We're revenue to about where that. to lagging

On with into the review our we're Solutions apparent that this you is side, what going good business. we've to Data management I'll it made be and next we've so year. achieved Digital going to where I'll start cost some progress.

with O'Neill As we of revenue last a produced that with of QX $X.X recognition benefited terms trailed pressure, our essentially who margin. that one-time our revenues product Since QX lot experience our revenue margin pain our fewer increasing flat mentioned, we of for work price their seeing product in and ongoing business million gross was work QX continue we're new cost was as of year, recognition pain. with revenue the to performed work and revenues a margins from bookings the was And and maintenance becomes QX information increased markets our pressure one-time performance keep QX's requirements do. on a were substantially in fact builds intact companies the our million to existing has positive. said, able of we We increased customer by gross our $X.X that core That in and publishers an effectively substituted targets, existing DDS base.

in in revenue partner starting client account impact see last with on we're But at and largest our planned. customers investment were to too with to coming has of this return this their an and year of early terms has help team, whom to to aligning management extent Our XXXX late the been progress challenges hired had all we redoubled pipeline efforts year, them development.

semi-fixed our management, terms steps costs. to cost In lower of we've and various taken annual fixed operating

cost result into us opportunities savings in labor sold to the going going million customers. you this $X required costs activities focused on will of efforts savings these helping of Innodata At variable which year. year offers annual to when compelling more time, and expect into learning compare our which intelligence, labs are our projects, approximately our our the R&D and goods on next within base reduce our in or versus more reduced cost are cost base artificial organization, cost We certain machine translates our same

vulnerable often there make other digital drive of even forecast that is quarter businesses into DDS the revenue, to XX% Still customer data that to As to recurring. dependencies a business quarter. remains difficult engagements, it now concentrations and result overall to diversifying on business close are for revenues our ongoing customer recurring us

there's finalize we're and to an which revenue. able revenue before the $X continued widely segue billings QX we're For deliverables about but XX% is we're to ongoing to the and which having continue engagement Synodex now as throughout seasonal in XXXX than the take had new forecasting our anticipating revenue on revenue of Synodex quarter, for increased client in we anticipated business. by processes in and our improvement I'll result place range demand. of to example, in to side a engagements QX, a recognize quarter million have certain more due that customer to

Our million approximately on basis. current levels annualized an $X.X to $X million

model, the and side, finding our the dedicate ways to cost business. we've take the resources out continued we improve rationalizing enhancement, the On technology through to of to efficiency costs operating

current business of that QX we're $X the stage at result, their to million next which is, There about that should will medically a revenue profitable of a are year loss, we're opportunities As offset insurance Synodex underwritten level. additional very or forecasting two contract anticipating for book exist couple in in wins. that next potential be could There however, quarter late its account QX, and account annual QX, new could early value. life which together may of occur these a likely complex anticipated

Our at approximately contract in products annual pursuing have that in stands and total value opportunities pipeline million we of now value process. several we're $XX.X

the to Finally, about Agility I'm business. talk going

that and in targeting PR Media as as business media as one-time of combination, includes service revenues acquired a posted the from the recovery $X.X of subscription-based year, Media the we year Intelligence million, approximately included as that $XXX,XXX Our SAS both Agility Miser. an business QX after Newswire last distribution we for QX branded acquisition previously adjustment. cost we well managed Agility last had of In products which

business, problem aside, posted per XX% of business, is of over But the $X.X XX% which decline. but customer the customer this to We acquisition, Putting the million off we acquired million. the renewed were not this revenue business. decline systemic the decline XX% or clients came be somewhat. average transition who that it a fall Media quarter XX%. the the out with Of to attributable attributable X% from decline, were or using Much $X.X declined X,XXX viewed XXX in Miser count XX%. not believe revenue of that million declined quarter a the side clients the where of is is as attributable the Agility adjustment the and to quarter the actively we turned Of to should This of $X.X level flat product. is remained evidencing

them, order that are category into that once fall renewing we us up issues QX. next these terminate once would rate. ended in a build of off clients There the to these footing they fall believe this but we opportunity. clients quickly Some of QX, the XX% informed on XX that remaining will after target out will transition way, solid And we be they and renewal are at

So, at XXXX look like. let's what might look

approximately of to with the add an expect XXX new clients XXX quarter, we've That added Since five be go XX QX add we'll quarters XXX clients of that in original into we We QX. acquisition, added QX. plus clients. assume average I'll that per the would since the a total XX we've clients, clients in in

account go revenues of another quarter sales need programs, business In growth XX% XX%, we'd million medium numbers, into $X in the with year go adding of per up rate XX we at new for the if we After another $X.X project awards the per from clients or taking achieve add-ons, renewal so the calendar clients sales from into quarter. we XXX about the and revenue year, the Looking to be a we and averaged with $X of into clients rate, resellers, term. year. position which million million then to clients could to XX this

Fortunately, have demos quarter number last year our marketing we and sequentially, however, qualified in we that the the of new by alone, marketing substantial made customers XX% increased increased investments for indicators. conducted leading sequentially. to strong XX% show this digital we by leads In begun

out not leads. but of getting better-quality leads So, we're just more marketing,

to also the partnerships for channel our be efforts, year to in we've agreements we looking to In put and this reseller will the direct contribute addition result. place sales

functions Meltwater. clients our we we've of by out products our of for. were $X terms prospects market in and billion, in our Many over looking with the so now our and compete. way, technical two won players, of offs team size, In new and addressable integration large that know that is largely is customers have releasing market these and competitors, dominated to engineering QX the we Moreover, bake services large is features Scission are

these Some needed made. of enhancements we've already

we've acquired But only journalists. For expect thanks journalists to he reach database, the after open final comments. now to a now done can we targeted I'll XX% of the example, the to improve when wrap line Agility emails questions. could to for sent expect the to the of user database, work which with his than I'll for user more destinations. the XX% up we're now ready emails reach some questions, their the Operator,

Operator

Please will We instructions] ahead. first our [Operator take question from Jordan. go Mark

Your line is open.

Mark Jordan

your Solutions Good on morning, last following gentlemen. Media guess on comments I the group. up Intelligence

that you've Given for or flow -- in segment top have goals implications segment, the that does should in you generate detailed is for line estimates the that the sort of have cash EBITDA what what XXXX? the free or

O'Neil Nalavadi

is This O'Neil. Mark. Hi,

the So, on as and approximately you about considered At was $XXX,XXX of let that one-time, this, had current of me hiring if of $XXX,XXX. EBITDA quarter stab current at loss take revenues The accrual was expenses which current quarter, account we we a that. doubtful approximately primarily the million quarter, debts. fees additional and the for look $X.X approximately at included

dollar very, estimated as helpful. point to Agility-based modules contribution and business from the The of very cash to it is between I hope point The additional enjoys, line about at are million. free terms we managed The revenues lower range to when million leverage. when business the as sell primarily products EBITDA cash XX%. we're that that's XX%. $X.X $X.X for XX% obviously, be operating flows, additional and bottom a is in is about high every could breakeven That's services So, free $X.X looking what the of is flows and for million. breakeven for high

Mark Jordan

business, to goal quarter. over the Relative the profitability Yes. a stated Synodex next of you

as from a would that Synodex in reap questionable generated having Given the be would pipeline ability away a have, it and outlook that Would of to outlook out. the for couple to may that then business? balance favorable positive meaningful be you fair which it a customer pipeline, from requisite is then more but that go XXXX assume the acquisitions, breakeven that might to customer be base profitability

Jack Abuhoff

Yes, Mark.

I is think, this Jack.

of We've side to continuing think that. a now. a lot We're we're that's are the where to fair do on we work I statement. done to doing some cost get and

development a we'll You and in improved efficiency resources know our we've technology that be done the some lot really of we cost to rationalization of dedicate the is doing it. terms

think that, a said, is early high. those would which are as very in stage, up anticipated As have got we or pretty we that going QX's we Behind couple and you know the also, a you does pretty things robust operating the that business other -- know you if much QX's, away, substitute. have customer this end pipeline late leverage

get the directly we line. bottom of So, the to benefits lot of that pretty a

Mark Jordan

the you've and a feel from final pricing at sort or to that be enough that expect the to be Okay. so, of overhead see therefore, had, offset business, And you me, pressures in you potentially with modestly the DDS normalized question margins reductions would up? you in marketplace flat cost those the sufficient do overall would

Jack Abuhoff

We XXXX managing of our haven't the finalized and and our be It tends revenue challenges business, forecastability. to for as wane. through projects wax and plan, really known to of our recognized bumpy one is years lumpy business the and we've that plan DDS as

we'll that work offer very and both got. other to business operations opportunities become compelling that think will to increase clients through positioned and and on the effort, we machine One know dramatically intelligence. You side. to and business the is is cost two artificial very approach things increasing really our through to parallel efficiency in they've that the And and efficiency run our learning

think position markets. offer puts In to to in other some services addition wider a to it that, us that we

those we're run ways terms inherent more we that figure how to we fixed of stream. our to looking we've revenue the agile those trying we of manage in that in fixed how us business, our to doing know in the the of and make level other The combination some at ebbs out thing business, you is we're costs can costs to and flows react are that variabilze ability with

Mark Jordan

much. you Thank very

Jack Abuhoff

you. Thank

Operator

And We Please our Clarkson with question Van go from next take ahead. Tim will Clemens.

is Your open. line

Tim Clarkson

Hey, O'Neil. Jack. Hey,

over things, division kind just go of division. to wanted Just a by couple

fit machine the bit learning, proprietary So, on how on And a business, guess some intelligence? I this would advantages -- what Google do what of talk can what with little some or from does can I does players that be mean Innodata bigger artificial what's you you in that the different the there? guys it area? does out about, does Microsoft or traditional have in

Jack Abuhoff

Well, discussing. good morning. big you could day Tim. spend a question. one way. It's a Thank complicated for a whole that It's we the Hi, probably

to the think I of machine business the and artificial world lot are be technology intelligence things in together are -- coming kind business of that to very going the on a impactful that enable we of that there are and to to learning do.

technologies we're that work and in A taking I released lot large business of do. types you're that applying doing the a leadership terms the built the that we by we're to of our customers being those describing. that that companies on frameworks do think role are of is

them. us being So, I competitive don't see as with

enabling openness important lot think we've accomplishments very got. cooperation that drive the I there's us and exchange to that's a of and

repeatable. to competitive know you We've extraction a won't AI do innovation that unique some a and got things asset of I us, other lab, is know our we've has entity -- able data got mean among know a scientists leading in applied You that new principally set. tools kind inviting but building we think what lot is stateside we're introducing our you terms to business We're We're base in -- consume Can projects. base. you the our multiple enabled important of in when know that that kinds are different be them ways. to used We're to of do. to very are customer customer and are them

the of XX only the are now service. leadership positioned emerged in those applying think with business that that and the terms we're we're I in to ways harness and some things the role So, of innovative taking publishing in out months business and last well capabilities of frameworks information really the there of to a

Tim Clarkson

with Okay, big is kind a the this that both going. last quarter. lot on of you've obviously that you're went internally pretty complicated obviously, you're doing? also this customer's to the but of project I And pretty well assume and some work results, it still starting see got happy

Jack Abuhoff

Yes, very interesting customer's an you And you happy. know there's anecdote the know there.

in big that to levels, when of the terms First you is ongoing them all, from from do expecting they And were there Of I'm a one leverage capabilities took project. requirement app know were the that and what of I what companies it the hearing know seven engagement customer IT what that anecdotally of of were included based we're organizations. some an dollar to, and now, of able them. hear to out our they done, we leading basis. absolutely this tackling it's where had also lab, to we you they one, AI that development ongoing it It's on that figured the seven needed you know multimillion took innovation they two

So, us. think distinguishing return the and that in this nice ones have. you area know already bring important They we've ones a will are to made and investments I

Tim Clarkson

on IDS, seems like quarter kind you ago, million, the do of two the on year to two a half did divisions, okay a fourth years the other know $X know by just you simple, Right, million. you it ago the numbers about

of that's mean you're a be reasonable number it is year $X that million, that expectation think million I the by $X.X a or possible? is the end this year? of $X.X reasonable approaching the to million, Is is $X.X that too you'll ballpark a million. level or conservative that kind Now in

Jack Abuhoff

guess things there. know I -- we You two

you close, been But that. realities when we said, the one on deals really we've confess our been now at is all, of of bad are working plan. XXXX having these know I First historically. that forecasting will

insurance things the clients sector, great move in engagement this you -- huge We see we our know been sector. but very life great in have with momentum, see We slowly potential.

know I'm it. number going to on put not a you So,

to we're making profitability business level, exit that book accounts that revenue is because thing we important nothing the our closes know in hard add service, QX on effectively they as don't drive to a hopeful two us do business, the the think seeing losing know our We're up forward. of the with we'll the business. enjoy just of to then with And the up couple adjustments need pipeline you If that business that the of quarter. should end got just a be you in be and next as adds I know as leverage new wash. the we're drive positioned way the we've you one these we're they anymore, we can we the will forecasting and operating

Tim Clarkson

So how right on customers do have the now? insurance you the in end many IDS,

Jack Abuhoff

say don't I says count. You know yes. I going XX but XX, that to have was O'Neil

Tim Clarkson

Okay, XX, doing? they to two, you're the of lose up of XX something so XX quality that remaining with that. the and one, are like might satisfied might you And pick work you

Jack Abuhoff

we're is satisfied Yes, working no with everybody with the quality.

Tim Clarkson

and Agility finally you just you've a bucket's new the with Okay successful it. been up customers, it's that picking hole side, had so know been in on the you've then

what you the Agility been the compelling Agility a that the have competitive competition? the What's and they makes from does combination firm, Canadian advantage them. customers are getting have proposition? of some that You've What of when do losing or

Jack Abuhoff

I lot are think there things. a of

product into bench, were you of we product. and some it there that Frankly, product good you know getting problems it. found The we the shop really better. onto got we've kind know think the got is with the work I when a

talked I about them the of on One call.

would knows know actually we knew In, You would you XX% know people of choose only know target would if acceptable. it's you Innodata the we and understand complete, wasn't business journalists the hit. that and targeted actually database anything, that that

enjoying a of the and know, work high So, now in we we're you to XX%. hit rates it did lot

a it. product other great. a is There People user made the we've like of lot So, it friendly. It's very great. to taken product. are The good advantages UI we've and

side. coverage service-oriented very our and is in the culture terms culture, a know think strong expanding. one targeting folks lot is traditional company as a You as very are And of drawn on doing which a a our social We're journalist I to. well side it's lot of of

we it to help accomplish it know need going them figure them. how out is we're they really figure them out and with that what accomplish we You help to

Tim Clarkson

Right, right.

Jack Abuhoff

for things hearing we're And from that. customers

Tim Clarkson

average growing annual a at, on If growth industry now? is that average just there kind overall industry? billion of the $X it's what industry, is rate out What right

Jack Abuhoff

There kind database analysis. monitoring, the the, There's the targeting, are the pieces three business. of to then the you and the know,

So, The X% about of the And it's you, growth is in rate. billion. X%. database X% the is rate. of about is market monitoring about a excess analysis overall, you growth terms And $X know if in

Tim Clarkson

Right.

Jack Abuhoff

There two players. are dominate

with the even even hardly those competitors. You of biggest but are compete the of we've we to of know on know map, is products got the we've full kind suite you -- the cool thing

Tim Clarkson

Right.

Jack Abuhoff

in. It's fun be a to position

Tim Clarkson

Right.

customers assume? You I have go to after, plenty of

Jack Abuhoff

That's right.

Tim Clarkson

right. All

done. I'm Thanks. Okay,

Operator

We Mangrove. instructions] take Steve will with [Operator from question Please go Kohl ahead. our next

open. is line Your

Steve Kohl

first alluded and last All quarter. guess you taking thanks my easy know good for not to morning, that hitting had it's guys to. you've as you on compliment of right, number all Wanted I the I call.

I problem when I the to And difficult. makes a the think the I do think it and have story numbers, you've changing Jack in growth you that line we're driving we're think in Innodata engaged very really is I few challenge getting I not others top alluded that know folks it looking these think and much. at

greater you strongly you and classic And to long parts I Innodata is I lines, conducting we whole. management I here. review of guess have the considered guys more of the have starting as than I'm guess guys are shoulders a case that think believed a think I sum So, those along is where wonder the if

shareholder what So, those to options and maximize we value. do what look to at are can start

Jack Abuhoff

came a talking great week, we spent the question. a about that. board of Steve, know exactly just we out directors of of -- an offsite Sure, time it's you lot And last actually and

these do of we able what in direction of very capital? on very about. considered for on we're be position at focused you know setting important them how they very point their and better part a know of you we've some that Are know At been value, actively How topic, in one whole? as a sources them with strategies? what in their businesses So, focused position best You best on best think growth? to do I own engaged they we or shareholder it's of might in other we're know looking accomplish talking off hands you terms very own their off

Steve Kohl

have one periodically that's should question? can over buy Jack, out you how guess the know don't point is Is folks or we, we as we stock stock drifting but know I and I is a the dig in from we if been expect haven't stock actually viewing awhile, some inside? we and should assume a to follow operative there's a here been you banks what around shareholder we I should guys to down probably to buck, what piggy see obviously see guess the that while. we up, it years, at and for see folks windows, and now start that, that down the buy be wrong as know limited Okay but you their you money perspective or again of see approach

Jack Abuhoff

the certainly I can at you we well that think relative the know discount. selling Yes, of think at to company, to a steep this price all like I take very stock I -- that is where would first

to would encourage encourage said, insiders now be and know you buying You that to stock. us encourage I

value see you I or the think window it, for over or view last where months stock we're XX on in lot thinking we're there. or that isn't that right bearish sorts the closed do. various we not it's not a individuals spent that When there when of stock. reasons a either you would We've as thing time to the cannot all don't a on of though know as the trade I company

case, but that's So, the that and know-- know people isn't that I you when to apparent

Steve Kohl

and certainly thank appreciate But good, can hope I it I update but plan the it guys a makes business. And very open, it do we window the the challenging if on where does appreciate isn't. obviously get you

Operator

from have George from instructions] Please go [Operator We another ahead. MKH. Melas do question

open. is Your line

George Melas

Jack. O'Neil. Hey, are How Hi, you?

Jack Abuhoff

morning. Hi, George. Good

in coming you your little do can if know there's You're unclear. bit don't I on a side. anything

George Melas

Maybe that. Jack it offsite mentioned I and seems that directors. -- quarter directors, of previous how years. business follow the sort how want try to some clearly understand you I bit the That And a for of better. years. really just had losing has should up you has There's be number number update. caller it a to just But you business Because price on some of guys? a interesting seems not reflects with for little opportunities. new the board evaluate the stock The of money like been there's sort the performed every

just has sheet balance know the was. getting, okay of very but much you incredibly So, gone not sort from solid it to rock what

expectations? question. those I'm know you how, So, first the understand did trying say And to Maybe how compare my evaluate you in to just board know would they all, to do you that's you XXXX? of first

Jack Abuhoff

guess, our is should. I would I George, and board Well, know way the think functioning boards most you

very the looking the closely the business You they're performance underlying of some and looking metrics of know at closely of they're the very business. at

You it do brainstorming that the one what lot and engaged. can of each They're businesses lot itself. of about there's to we and each the there's things very focused of know is a them. of focus And very on and improve in complex they're a on

we're In performance, terms of happy with not ourselves.

of hard. stock mean in is to There We our reflective very made. some to In there's we're will happen. enough things But no yet state that on give being reason certainly working convey not aspire it's going it and to very, We're than not in to businesses, hoping people believe You very it's what's yet that know results. the price improve. I that hard progress plainly. believe and our I'm to and showing, not make will reflective other able individual they we're way working

George Melas

I guys Right, see the bonus in you right, had no am year, -- beginning just I'm of right. mean wondering, I 'XX. at I every

really I related in it bonus bonus hold What transaction structure or of guys the based and sort the was to the growth is to on? board to accountable? it got sort metrics was related what of or think work you based the to O'Neil that on EBITDA are revenue and and what a 'XX there. the Agility Was expectation using you

Jack Abuhoff

been both have then that get you and performing. consolidated company know used growth, metrics metrics we've have underlying you kind revenue relative been KPIs and to do profitability, the know that the customarily you to specific So, the need divisional know of to we

in that sharing and we're among difficult we're that forecast also, why though performed out easy stable the I'm that. public that set, that There It's The folks in not predictable. hoping these kind DDS order decided companies to competitive we're that tough it's you we've terms we're want. sustainable intense some doing you enough all surprises looking at in linear. we the stable you that's we're that what things been know believe have not It's with to believe not achieve you the the to our accordance you things calls needed we spent know will about is other that make working doing doing to stability, one-on-one of Things business earnings. understand And We've have know in business drives businesses not We simply that we're drives you been results know again, of process a start in this right not you But forecast. found you having doing under and know saying, have is we And road. very of what, what innovating our business, in we business innovating It's expectations it this plans. innovate year among underlying that do with the and revenues, been the where through. a business. scrutiny. conversations a sustainability, years of going, with

George Melas

Great.

So, defined or I that I first is those Media reasonable you have likely the Synodex return haven't And that way? well? all stays but word, if plans it the and flow you the breakeven those Intelligence 'XX, sort and it's that IADS cash that the know don't 'XX, business you that for Are but -- expectations? the outlining your in positive EBITDA you of fair positive of are or as to, to turns have say right goals is budget know business been know returns your, two reaches

Jack Abuhoff

I think we've the they Yes, got reasonably think I achievable. pipeline. are

I think all we've taking got of the momentum to estimates achieve them a guesstimates that finish and exercise those of reducing and and we've got spreadsheet. to to the

a concentration, the transitionary of off? we operating kind of though, always and are look for that going going does these Agility client in stability did. that to know, you business tough example know there's isn't investors there where things with lot to client leave business are more much once leverage for. with call where What business. to kind a well of it's you? of When forward going right The is, we the One strategically the never looking What's you core fall business win? you concentration, digest forecast what again, where It our issues. at of fits

direction. So, right again, I the think moving in

the to breakeven year look next or profitability in going businesses. for think we're I

well. that. I where working side think we've We're are. we cost to got that's the as And largely achieve momentum the

George Melas

recurring? the is right right is Okay and XX% business that--? hear DDS then now that that, you Is did I

Jack Abuhoff

right. that's Yes,

George Melas

have subscription is the you or recurring that XX% a basically sort are or quarter, for XX% beginning that revenue of XX% long-term does the of contract at the quarter means these on visibility of into or the But mean contract? of transaction that revenue

Jack Abuhoff

Sure.

George Melas

the mean? does XX% recurring What

Jack Abuhoff

overall a XX%. we Yes, so was approximately What there. business said was correction the just

George Melas

Overall.

Jack Abuhoff

we when And say… Overall.

George Melas

What about DDS?

Jack Abuhoff

when some the it's know business recurring, we hard bit is that categorize. a And of to you little say

to at contract. know do look know we consume we that something then don't shift product maintenance ongoing continue-- we're somebody to that a at nature in the is build kind underlying ongoing look that Is you it the underlying of You we of build mode, will expected would if nature What the of be mode the business. an a either has basis or on to an mode

George Melas

Okay.

Jack Abuhoff

Indefinitely.

George Melas

-- can -- would as you to but -- of DDS opposed you a would what you the of how project be consider things would be base how the category that business, to percentage Just sort recurring?

Jack Abuhoff

doing new for now right we've think on substantial recurring we're new a plus recent as at know client, more work that it's, nature you this in we're this pretty I looking based conversations. recurring got business being

lower So, is, the when again, very doing a it's one-off than was project. is large or it we're business

it. -- fact point. project at So, around, it pride in another large a ourselves this take that there's But recurring if the would it's we to came large element we

George Melas

course. Of course, of

very thank you much. Okay,

Jack Abuhoff

that primarily vendors. continue customer mitigate services. need are you of in if little only those -- contracts two not under that those quarter embedded we're maintenance or pretty the the supporting where services time. normally for know a with those you is The you take XX% support that, long to that basis, $XX.X kind look as three help bit will is Jack a The to Just on for you if risk million, provider approximately a product described okay customers is of that maintenance we of and subscription-based the current mission-critical

in a quite role of have a leadership We few them.

in good every However, know that. a the customer We pretty in another one once while. can a job switch supplier to maintaining you from do

So that's, approximately XX%.

as is volume services. fluctuations what is to with there. customer some capabilities Jack of described this a it shape along year, great a pretty that the of recurring. capability But in with But recurring the a started Jack taking AI terms Another that It's XX% the is of characteristic nature machine providing what we it well. because is the value learning described developing we then unique of have built customer which and

right piece quite recurring the now. So, is high

George Melas

O'Neil And that's customer. one

O'Neil Nalavadi

the The revenues. improve to real challenge is

a another right then million it will You lot you of revenues, line the now. add go to of know if bottom $X

George Melas

yes. Yes,

Thank well. you. very Okay,

Operator

Kohl a question follow have Mangrove. with And ahead. do we Please go from Steve up

open. Your is line

Steve Kohl

here guys. you've quite I know deal what after look gone? mirror has how I have We -- when to a assets curious. How Not of you just you work had the one is from think mean evaluate how I'm or and of it it evaluate would can cash that have liked at spoken do little rearview acquired on, you the I look through them? the there, we know metrics rates. through you flow renewal you on the when When I the at perspective acquisition kind some and attrition it bit a guys do you a you good you question, last business, initially. some of know

Jack Abuhoff

go then shot I'll I'll give O'Neil first and a guess I also. it at

on a where now, putting organization, I critical in will I be how going to done revenue business mean the and it's the evaluate revenue of it, partners, at time it. I what sit around of gone indicators, by the to to you translate and on team showing we is has back, reinvigorating putting to just continue think at it sales fact one-time job --not is marketing we're too The be success looking early early do? has think for. in and signs product. cost now. hovering are acquiring into are, equivalent place annualized right probably say whether we growth to -- of we which it's based are reflect did probably great roughly that tremendous able kind these we evaluate level channel the customer on know enough that place the where We're be too but to

business know been are scale much this it I'm a we comps larger an the we comps, hopeful industry, times in to compare up four revenue more the businesses. that opportunity Do they recent in and have businesses. level. to do. that way as Those mature those? are we that Those to favorably high stand as have Now

Steve Kohl

Okay. Very good.

Operator

our from ahead. Furst Associates. next take with we'll And question Joe Furst Please go

is open. line Your

Joe Furst

there, the that correct? $XX insurance potential are say of that hear I worth correctly, you you're around revenue? gentlemen. Good with afternoon Is did working In business, million new annual did clients

Jack Abuhoff

we million. shared that of the their have when have said that's the we into do level who say requirements -- clients the the who that work we of -- they work so third goals, translate And requirements, business. pipeline, was with yet $XX.X that our quarter that level not us that we value Yes, their could closed do pipeline of their for

business. those that piloting talking about engagements. conversations active We're We're with. business. We're folks in talking their of the All we're potential clients about are

Joe Furst

different many represent? about does And how companies that

Jack Abuhoff

probably that's that don't with XX. or XX but me about I

Joe Furst

Okay.

So, closing a anyway. you them think of you few would have a of chance good

business recurring that trying So of to the helpful last be been these would you've it's years. kind quite that because get couple of

Okay, you. thank

Operator

at And we questions further have time. this no

Jack Abuhoff

recognized and was you, given that Otherwise, guess quarter we our accomplishment. revenue in quickly DDS, million held in recap over accomplishment operator. on margins a in gross know out but in in QX produced that $X an it XXXX. which was Solutions Digital We thank business, line an revenues the I'll just you Data tough I So, QX. stands really as that was

into more rationalization. In have We're terms benefit aggressive cost a as or will an -- We're we're $X of a quarter, which year, next anticipating going management, well of going cost year be million we'll the of the will base. a projecting into lower alignment profitable that and result accomplishment. cost be Synodex

we be Synodex exiting as support. QX client be cancellation may insurance said could but that in business of engagements part an think by who or be a of closes we in these offset that the the QX, early will two we late existing potentially either have We

pointing are retention demonstrate drive are continuing course, early indicators be largely they things think we Agility, us, could client Of the position that to pipeline sequential be quarterly think growth. we've issues after and to quarter, we that front a transition-related once the change which in the success. will In we're got. there behind then that fourth we'll in And the to

we're joining soon. forward you you continued thank all doing. again, to what the So, talking call, to in interest for Look for your

Operator

conclude Xth, at This Eastern. Today's pm X:XX today's available today December replay conference XXXX, until pm for Eastern from is conference. does X:XX

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